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HUD 406/2
Мил
- 9 NOV 1993
RE
Ms Lewis CRD
INJEA
Reference
file
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ور خام
HONG KONG CONSULATE GENERAL:
BRITISH COUNCIL CONTRIBUTION
1. We spoke about my minute of 4 November to Mr Smith (OED) and the meeting I held today with RFD and OED to discuss how to present to the Treasury our case for special financial arrangements for the British Council's accommodation in the Consulate General in Hong Kong. I explained that we would like CRD to put a proposition to the British Council which, if they could agree to it, might prove persuasive with the Treasury in gaining their agreement for the British Council to pay less than the market rate (or TDR) for their accommodation in the new building.
2.
It is difficult for us to produce objective data which demonstrates that the arrangements we have worked out (that the British Council pay their share of running costs) (a) will not have the effect of increasing the British Council's grant in aid and (b) will not amount to a subsidy by the Diplomatic Wing of non grant in aid activities. As you know, we have explained to the British Council that the Treasury is insistent that rent must be paid. The British Council have told us that they will be prepared to pay the same amount as they do now ie that they will top up running costs (estimated at about £500,000) with what we can call a rent element; the two sums not to exceed the current running costs plus rent ie around £800,000. We might expect this offering to cover (a) since there will be no saving to the British Council as a result of moving into the new building. The second point, (b) is more problematic.
3.
The British Council argue that the prospects of the English teaching operation might suffer from their move to the new building because of (i) moving away from the Wanchai area which houses similar institutions and which is familiar to their clientele (ii) close association with the official representation of the former colonial power could be bad for business. They appreciated the strength of the argument for collocation and were prepared to go along with Ministers' wishes, but they do not have the resources to pay rent, even on TDR basis (the cheapest they could hope for). It is of course impossible for us to quantify the risk at this stage. But OED's thought is that we might explore the thought of setting the "rent at £800,000 for say the first 3 years of occupation of the new building and that in subsequent years, the rent would be pegged to the performance of the English language teaching operation. We have not gone any further than this of course there are all sorts of questions about
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